When Microsoft lowered the price of its Surface RT by $150, we knew something was up—and we were right. After acknowledging its iPad killer hadn’t captured any significant amount of tablet market share, the company revealed it took a $900 million loss on unsold Surface RT models. Holy cow. So what did the Microsoft CEO have to say for himself?
At a recent company town hall event, Ballmer discussed the current situation of the Surface, admitting the company “built a few more devices than [it] could sell.” When a company says the words “$900 million” and “loss” in the same sentence, Ballmer’s concede is one of the bigger understatements of the century. The total loss comes straight out of Microsoft’s total Windows revenue.
Ballmer said the price cut to its Surface RT was necessary to entice consumers to buy the device, though there’s no word on how the reduction has affected sales. The CEO did mention, however, that a next-generation Surface is being planned, and also said getting Instagram on Windows Phone is a huge priority. Incidentally, Microsoft has been testing new Surface devices with a Snapdragon 800 chip, according to The Verge.
In addition to the poor performance of its Surface RT, Ballmer also said Windows devices—phones, tablets and PCs—haven’t lived up to internal expectations. So, basically, the company is having trouble getting all of its products out the door. Still, Microsoft managed to post $19.9 billion in revenue during a three month period ending in June, so panic levels haven’t reached red just yet.